On Nov. 15, 2005, all Americans who are enrolled in Medicare will have the option to purchase prescription drug coverage under the new Medicare Part D.
The Part D services and benefits will be delivered by private insurance companies and pharmacy benefit managers that contract with the Centers for Medicare & Medicaid Services (CMS). The government then pays the provider a preset amount for each senior or recipient enrolled. CMS has reviewed plans to be offered under Part D and issued approvals for plans to compete to provide this coverage. The plans go into effect January 2006.
Seniors who enroll are expected to reap substantial savings. According to a 2004 report from the Congressional Budget Office, Part D participants will spend an average of $792 for out-of-pocket prescription drug expenses. This is a 37% savings from the $1,257 that they would have spent without the new law.
Because of the attractiveness of Part D plans, all seniors should consider this coverage, even it they don't currently have prescription drug coverage. Considering that some 70 million baby boomers will turn 65 in the next 20 years, that's going to mean private health insurers have a big job ahead of them.
Entirely voluntary, the program allows Medicare recipients to shop for the best coverage available in their area.
CMS reports there will be between 11 and 23 providers from which seniors can choose in each of 34 regions. Benefits and advantages will be similar to those enjoyed by most American workers, since CMS requires that plans be designed to look and act like prescription drug coverage included in personal provider organizations, health maintenance organizations and fee-for-service plans.
The initial open enrollment period–from Nov. 15, 2005, through May 15, 2006–is expected to be very busy for insurers. Potential customers range from the very educated to the uninformed, so insurers have an important role in helping this widely diversified public understand the coverage.
